TitleNews Online Archive

TitleNews Online Archive

Stewart Announces Record Year 2003

February 18, 2004

HOUSTON, /PRNewswire-FirstCall/ --. For the second year in a row, Stewart
Information Services Corporation (NYSE: STC ) annual revenues, net earnings,
orders and earnings per share were the largest in the company's history.

Revenues for the year 2003 were $2.2 billion, a 26 percent increase from
2002. Net earnings for the year 2003 were $123.8 million, or $6.88 per diluted
share, compared with net earnings of $94.5 million, or $5.30 per diluted
share, for 2002. Stewart's assets now exceed $1 billion for the first time
in the company's history.

Stewart earned $20.8 million, or $1.15 per diluted share, for the fourth
quarter of 2003, compared with earnings of $43.8 million, or $2.46 per diluted
share, for the fourth quarter of 2002. Revenues for the fourth quarter increased
to $614.9 million compared with $551.3 million a year ago.

Although revenues for the fourth quarter increased by 12 percent over the
fourth quarter of 2002, earnings declined by 53 percent. The fourth quarter
included a significantly higher proportion of revenues from agency operations
in 2003 (66 percent) compared with the 2002 period (59 percent). In high-
volume years like 2003, agency operations generate a lower percentage of
earnings to revenues than do direct operations. Employee costs for the rollout
of SureClose® to more than 400 company locations in 2003 also affected
the full year and the fourth quarter. Additionally, reserves taken on litigation
in progress and a loss on a mapping/automation contract reduced earnings
per share by approximately $0.13 in the fourth quarter.

Refinancing transactions declined in the second half of 2003 as a result
of an overall increase in mortgage interest rates. Most industry experts
project current interest rates to continue or move slightly higher and are
forecasting significantly fewer refinancing transactions for 2004.

Stewart's incoming orders in the fourth quarter of 2003 were down 29 percent
from the same quarter a year ago. Fourth quarter orders were off 26 percent
from the third quarter. Stewart Morris, Jr., president and co- chief executive
officer, said, "We monitor our incoming orders daily and weekly. Our
employee counts at the end of the year had been reduced by approximately
10 percent from the peak month of July 2003. Our employee costs for the fourth
quarter were approximately 13 percent less than the employee costs for the
third quarter. We are continuing to lower staff levels and expenses to allow
for reduced revenues, while maintaining superior core service to our customers.

"We continued our systematic analyses and acquisitions of title agencies
and real estate information companies, concentrating on transactions that
will be accretive to earnings and shareholder wealth," said Morris. "By
completing process flow analyses and installing our integrated technology,
we create further gains for our shareholders.

"Our investment in technology allows us to attract top quality personnel
and support their effectiveness in serving our customers. The installation
of our SureClose® transaction management system will allow us to increase
the volume of delivery of bundled packages of services for lenders and title
agencies," added Morris. "The implementation of our SureClose system
is transforming our company to a real estate transaction management business.
It also facilitates a shift from paper-based transactions to electronic processing
improving both internal efficiency and service to our customers. By year-end
we increased the number of SureClose installations to over 400 company locations
with more than 140,000 files in the system. Extra startup expenses are incurred
in implementation; however, when fully implemented we believe this will provide
us a competitive advantage and help the company better manage its costs through
all types of market conditions."

"The resumption of a payment of an annual cash dividend in the fourth
quarter of 2003 of $0.46 per share, the continuing emphasis on growth in
book value to $34.47 and all-time record earnings per share in 2003 illustrate
our focus on being a value-creating entity," said Malcolm S. Morris,
chairman and co-chief executive officer. Indicative of this focus on growing
shareholder return, Stewart has been included on the prestigious Forbes Platinum
400 list of the best performing big companies in America for the third consecutive
year.

"The challenge going forward is to right-size in an ever-changing economic
landscape, but doing so with the expectation of long run increases in revenues
and profitability regardless of short term hurdles," said Morris. Fannie
Mae estimates that one-to-four family lending will drop by more than 50 percent
in 2004 when compared with 2003 -- with substantially all of the decline
coming from reduced refinance transactions. They project 2004 existing and
new home sales to be the second best year in history. Industry expectations
are for commercial transactions to continue to gain volume. Stewart's recent
acquisition of Title Associates, Inc. demonstrates its ongoing emphasis on
expansion in the higher premium commercial sector.